Exclusive: PepsiCo to launch 100 Tesla Semis in 2023, says executive

NEW YORK/SAN FRANCISCO, Dec 16 (Reuters) – PepsiCo plans to roll out 100 heavy-duty Tesla Semis in 2023, when it will start using the electric trucks to deliver to customers including Walmart and Kroger, the soft drink maker’s main official fleet. he told Reuters on Friday.

PepsiCo Inc. (PEP.O)which ordered the big trucks in 2017, is buying them “outright” and is also upgrading its plants, including installing four 750-kilowatt Tesla Inc. (TSLA.O) charging stations at its Modesto and Sacramento California locations, PepsiCo Vice President Mike O’Connell said in an interview. A state grant of $15.4 million and a federal grant of $40,000 per vehicle help offset part of the costs.

“It’s a great starting point to get electrified,” said O’Connell, who oversees the company’s vehicle fleet.

“Like any early technology, the incentives help us develop the program,” he said, adding that there were “a lot” of development and infrastructure costs.

PepsiCo is the first company to experiment with battery-powered Tesla Semis as a way to reduce their environmental impact. read more

United Parcel Service Inc. (UPS.N) and food delivery company Sysco Corp. (REASON.N) have also reserved the trucks, while retailer Walmart Inc. (WMT.N) is testing alternatives.

PepsiCo’s plans to use the Semis have been reported, but O’Connell provided new details about how the company is using them and its timeline for implementing them. Tesla CEO Elon Musk initially said the trucks would be in production by 2019, but that was delayed due to battery limitations.

PepsiCo said it plans to deploy 15 trucks from Modesto and 21 from Sacramento. It’s unclear where the others will be located, but O’Connell said the company aims to roll out the Semis to the central United States and then the East Coast.

The company’s Frito-Lay division sells light food products, making it a good candidate for electric trucks, which have heavy batteries that could limit charging capacity.

The Semis will haul Frito-Lay food products for around 425 miles (684 km), but for heavier loads of soft drinks, the trucks will initially make shorter trips of around 100 miles (160 km), O’Connell said. PepsiCo will also use the Semis to transport beverages in the “400 to 500 mile range as well,” O’Connell said.

“Hauling a trailer full of chips is not the most intense and difficult task,” said Oliver Dixon, a senior analyst at consultancy Guidehouse.

“I still think Tesla has a lot to prove to the broader commercial vehicle market,” Dixon said, citing Tesla’s unwillingness to offer payload and pricing information.

PepsiCo has earmarked some of the trucks planned for the Sacramento location to make deliveries to Walmart and grocery stores like Kroger Co. (KR.N) and Albertsons Cos Inc. (AC.N). Trucks from the Modesto Frito-Lay plant have just arrived at PepsiCo distribution centers, O’Connell said.

All Semis going to PepsiCo will have a range of 500 miles (805 km). O’Connell added that he doesn’t know when Tesla will start rolling out 300-mile trucks. When Tesla starts building them, PepsiCo will “rotate” them in its fleet, he said.

PepsiCo declined to share details about the price of the trucks, a figure that Tesla has kept quiet. Competing vehicles sell for $230,000 to $240,000, said Mark Barrott of consultancy Plante Moran. He added that the 500-mile-range Tesla Semi could command a higher price because its 1,000 kilowatt-hour (kWh) battery pack is about twice the size of many of its rivals.

“We keep the trucks for a million miles, seven years,” O’Connell said. “Operating costs will eventually recover.”

The Gatorade maker declined to share details about the trucks’ weight, another closely guarded secret by Tesla.

He said Tesla did not help pay for the mega-chargers for the trucks, but provided design and engineering services for the facility, which comes with solar and battery storage systems.

O’Connell said a 425-mile (684 km) drive with Frito-Lay products drops the Semi’s battery to about 20%, and recharging takes 35 to 45 minutes.

Reporting by Jessica DiNapoli in New York and Hyun Joo Jin in San Francisco; Additional reporting by Joe White and Siddharth Cavale; Edited by Jonathan Oatis and Rosalba O’Brien

Our standards: The Thomson Reuters Trust Principles.

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